Peter Taylor, FBA, AcSS
The Role of Cities in the Process of Economic Globalization
Materialien
Expertise für das WBGU-Hauptgutachten
„Der Umzug der Menschheit: Die transformative Kraft
der Städte“
!
The!role!of!cities!in!the!process!of!
economic!globalization!
!
!
!
Peter!J!Taylor!
Professor!of!Human!Geography!
Faculty!of!Engineering!and!Environment!
Northumbria!University!
Newcastle!upon!Tyne,!NE1!8SP,!UK!
!
Director!of!the!Globalization!and!World!Cities!(GaWC)!
Research!Network!
(www.lboro.ac.uk/gawc)!
!
!
!
Expert!Report!commissioned!by!!
!
Wissenschaftlicher!Beirat!der!Bundesregierung!Globale!
Umweltveränderungen!/!German!Advisory!!Council!on!
Global!Change!(WBGU)!
Luisenstraße!46!
DW10117!Berlin!!
Germany!
!
!
!
!
March,!2015!
Contents!
!
Prologue!
!
Central!questions!
!
Empirical!difficulties!in!global!urban!research!
!
Theoretical!difficulties!in!global!urban!research!
!
Part!A!! !Conceptual!grounding:!globalizations,!cities!and!states!
!
Economic!globalizations!
!
Cities!as!globalWlocal!nexus!
!
Global!spaceWeconomy!
!
Part!B!! !Main!text:!cities!in!a!world!city!network!
!
Global!network!connectivities!of!cities,!2000W2013!
!
Cities!in!global!regions!
!
Cities!as!global!strategic!places!
!
European!cities!in!a!global!context!
!
Concluding!comments!
!
Global!infrastructure!networks!
!
Resilience!and!change!in!the!world!city!network!
!
References!
!
Appendix!
!
!
!Prologue!
!
The!terms!of!reference!for!this!Report!relate!to!‘the!economic!dynamics!
between!different!world!regions!and!cities’!specified!as!seven!‘central!questions’.!
It!is!pointed!out!in!commissioning!that!it!is!‘a!very!challenging!task’!to!combine!
the!subjects!of!the!questions!in!a!single!Report.!This!demanding!assignment!is!
tackled!as!follows.!First,!the!questions!are!listed!and!briefly!answered!but!upon!
the!broad!knowledge!of!the!author!derived!from!two!decades!of!studying!cities!
in!globalization.!At!this!stage!detailed!evidence!for!answers!given!is!not!
provided.!Second,!the!difficulties!of!researching!cities!globally!are!discussed!and!
this!results!in!a!narrowing!down!of!the!scope!of!the!Report!to!provide!required!
understanding!of!the!economic!prospects!of!cities!using!a!strong!evidential!base.!
Third,!the!result!is!a!main!text!in!two!parts!that!provide!an!operational!model!of!
the!world!city!network!enabling!numerous!analyses!that!inform!the!economic!
dynamics!of!cities!and!world!regions!in!contemporary!globalization.!Fourth,!a!
return!to!the!central!question!in!light!of!the!analyses!provides!a!concluding!
summary.!
Central!questions!
!
1. How&are&processes&of&relocation&influenced&by&globalisation,&
the&increasing&division&of&labour&within&the&world&economy&and&the&
economic&structural&change?&
This!is!the!key!question!reflecting!successful!firms!growing!across!many!
locations!as!multinational!or!transnational!corporations,!thereby!changing!the!
global!division!of!labour,!and!engineering!structural!change!towards!an!
information/knowledge!dominated!economy.!The!global!dimension!of!the!
change!has!been!indexed!in!two!ways!as!the!rise!of!‘emerging!economies’!across!
different!regions,!and!specifically!the!rise!of!Pacific!Asia.!The!latter!encompasses!
the!most!rapid!urban!economic!revolution!in!world!history!in!China.!We!are!
clearly!in!a!period!of!change!from!the!longWstanding!world!economy!core!
(western!European/northern!America)!of!the!world!economy!to!a!new!economic!
globalization.!
&
2. Which&cities&are&winners&and&losers&in&the&process&of&
economic&structural&change&(industrialisation,&tertiarisation,&
knowledge@based&society)?&
The!cities!that!have!gained!and!lost!from!this!structural!change!vary!greatly!but!
include!the!following!(i)!London!and!New!York!have!emerged!as!leading!global!
cities;!(ii)!there!is!a!tendency!to!concentrate!global!economic!process!in!one!city!
per!country!to!the!relative!detriment!of!the!‘second!city’!such!as!Sydney!over!
Melbourne,!Toronto!over!Montreal,!Sao!Paulo!over!Rio!de!Janeiro,!Tokyo!over!
Osaka,!and!even!Milan!over!Rome!and!Mumbai!over!Delhi;!(iii)!more!generally,!!
globalization!has!enhanced!urban!primacy!within!countries!(often!capital!cities,!
and!especially!in!smaller!countries);!in!Pacific!Asia!Hong!Kong,!Shanghai!and!
Beijing!are!quite!recent!‘winners’!and!in!this!they!contrast!with!Tokyo!(no!longer!
combined!with!London!and!New!York!as!one!of!the!trio!of!major!global!cities);!
(iv)!there!are!two!types!of!industrial!city!declines,!first!the!traditional!industrial!
cities!of!the!western!core!of!the!world!economy!that!are!frantically!trying!to!
‘reinvent’!themselves,!and!second,!the!new!industrial!zones!of!the!late!twentieth!
century!in!the!‘developing!world’!subsequently!undermined!by!unprecedented!
industrial!growth!of!Chinese!cities.!
&
3. Is&the&thesis&or&the&assumption&of&the&concurrence&of&urban&
growth&(due&to&population&increase)&and&economic&growth&correct?&
The!relationship!between!demographic!and!economic!growth!based!upon!ruralW urban!migration!generated!by!employment!opportunities!in!cities!was!broken!in!
the!twentieth!century!in!poorer!countries!of!the!world.!Quite!simply,!massive!
migration!to!cities!outstripped!the!ability!of!those!cities!to!generate!enough!jobs!
resulting!in!the!largely!informal!economies!of!today’s!poor!megaWcities!with!a!
concomitant!raft!of!‘urban!problems’.!Meanwhile!in!the!richer!countries,!the!
relationship!has!largely!held!up!with!traditional!industrial!cities!either!
stagnating!or!declining!in!population.!The!urban!revolution!in!China!is!a!special!
case,!avoiding!the!travails!of!other!fast!growing!cities!outside!the!western!core,!
there!has!been!huge!creations!of!jobs!to!complement!the!huge!ruralWurban!
migration.!
&
4. Which&locations&are&chosen&by&international&companies?&Just&
“international&cities“&or&other&cities&as&well?&
Historically!the!term!international!cities!refers!to!large!trading!centres!especially!
those!housing!international!fairs.!In!contemporary!globalization!the!major!cities!
are!commonly!called!global!cities!and!the!term!world!city!is!also!used.!However!
all!cities!are!part!of!globalization!since!it!is!ubiquitous!so!that!smaller!cities!will!
have!been!‘chosen’,!perhaps!via!takeover!acquisition,!by!some!companies!with!
international!reaches!as!part!of!their!portfolio.!Thus!some!economic!activities!
that!have!traditionally!been!very!local!in!scale,!such!as!brewing,!are!now!widely!
organized!through!worldwide!corporations.!One!particular!feature!that!attracts!
scientifically!orientation!companies!is!the!presence!of!one!or!more!prestigious!
universities.!
&
5. Which&industries&/§ors&move&to&or&are&set&up&in&
international&cities&and&why?&
Global/world!cities!are!generally!recognized!through!their!advanced!producer!
services!(financial,!professional!and!creative!work)!and!by!executive!(command!
and!control)!functions!(corporate!headquarters).!Whereas!the!former!have!
become!particularly!centralized!as!part!of!economic!globalization!this!is!less!so!
for!executive!functions!where!historical!origins!of!firms!are!still!commonly!
headquarter!locations.!However!acquisitions!and!takeovers!do!tend!to!create!
centralization.!But!global/world!cities!are!much!more!than!just!service!centres,!
however!advanced,!and!are!usually!seen!as!being!‘wellWrounded’!in!their!array!of!
urban!activities!such!as!higher!education,!myriad!entertainment,!highWvalue!
shopping,!etc.!Competition!for!international!sporting!events!has!become!part!of!
the!process!of!major!city!branding.!
&
6. How&does&the&networking&among&international&cities&work&
(transport,&information&and&communication,&lifestyle,&labour&
migration)?&
In!the!information/knowledge!economy!electronic!communication!has!enabled!
worldwide!corporate!organization!but!this!has!not!lessened!the!importance!of!
faceWtoWface!business!contacts!so!that!transport!passenger!expansion,!especially!
air!travel,!has!grown!with!the!world!economy.!Global/world!cities!attract!two!
very!different!groups!of!migrants,!the!very!rich!with!their!expensive!real!estate!
and!related!lifestyles,!and!poor!migrants!attracted!by!the!jobs!servicing!rich!
lifestyles.!There!is!a!debate!on!the!degree!to!which!this!dual!migration!makes!
global/world!cities!exceptionally!unequal!urban!places.!
&
7. Does&the&economic&growth&of&cities&in&the&global&south&generate&
a&growing&middle&class?&
Even!though!the!major!cities!of!the!global!south!have!myriad!urban!problems!
with!a!large!majority!of!the!population!very!poor,!they!still!house!large!numbers!
of!people!in!formal!employment!with!typical!middle!class!consumption!habits!as!
indexed!by!occurrence!of!huge!shopping!malls.!Thus!a!global!south!city!of!ten!
million!may!have!the!same!modern!shopping!capacity!as!a!global!north!city!of!
two!or!three!million.!Whether!the!global!south!middle!class!is!an!important!
growing!feature!of!the!world!economy!varies!across!cities!but!it!is!most!
definitely!part!of!China’s!massive!economic!rise.!!
!
The!above!are!initial!answers/comments!that!require!support!through!reporting!
of!detailed!research!findings!upon!which!they!are!broadly!drawn.!However!this!
is!not!as!straightforward!as!it!first!appears:!both!economic!globalization!and!
cities!are!studied!in!various!different!ways!producing!contested!results.!This!
Report!is!not!the!place!to!rehearse!these!debates!but!it!is!important!that!the!
specific!approach!taken!here!is!clearly!set!out!and!justified.!Many!problems!arise!
because!globalWscale!research!is!much!more!difficult!than!nationalWlevel!research!
for!both!empirical!and!theoretical!reasons.!These!are!treated!in!the!remainder!of!
this!Prologue.!
Empirical!difficulties!in!global!urban!research!
!
It!has!become!commonplace!to!lament!the!dearth!of!data!for!worldwide!
comparison!of!cities!(Short!et!al!1996;!Taylor!1997).!There!are!data!available!for!
populations!of!cities!but!comparable!economic!data!across!cities!worldwide!is!
much!harder!to!find.!There!are!some!commercial!data!collections!but!these!are!
problematic!for!simple!definitional!reasons.!Whereas!data!on!countries!is!cleared!
demarcated!geographically!by!the!boundaries!of!states!there!is!no!such!
equivalent!means!of!specifying!cities!(Brenner!and!Schmid!2014).!Official!data!
tends!to!focus!on!administrative!areas!but!there!is!no!agreed!definition!of!city!or!
cityWregion!across!countries.!Commercial!data!collections!do!not!seem!to!have!
properly!recognized!this!and!therefore!have!no!solved!the!comparative!problem.!!
!
The!importance!of!this!problem!is!shown!by!a!simple!example.!The!question!of!
economic!inequality!in!cities!was!broached!above!and!it!would!be!useful!to!
explore!this!matter!in!cities!across!the!world.!And!indeed,!measures!of!the!Gini!
coefficient!of!inequality!are!available!from!at!least!one!data!producer.!But!while!
this!coefficient!is!salient!for!countries,!its!utility!for!studying!cities!is!doubtful!
because!the!areal!definition!of!a!city!tends!to!be!strongly!related!to!the!results:!a!
city!that!is!underWbounded!(mainly!central!city!and!a!few!inner!poor!suburbs)!
will!be!measured!as!having!a!low!level!of!inequality!whereas!a!similar!city!more!
widely!bounded!(including!all!its!richer!suburbs)!will!be!shown!to!have!high!
inequality.!However!such!a!result!does!not!reflect!actual!differences!between!the!
two!cities!but!rather!it!is!an!artifact!of!boundaries.!And!as!the!spatial!structures!
of!cities!become!ever!more!complex,!even!separating!neighbouring!cities!
becomes!impossible,!which!means!a!city’s!inequality!just!cannot!be!measured.!!
!
This!areal!definition!problem!cannot!be!‘solved’!by!improved!research;!cities!are!
not!suited!to!being!neatly!demarcated!in!the!landscape,!rather!they!are!
intrinsically!dynamic,!famously!‘sprawling’,!and!generally!resisting!any!simple!
containing!for!data!collection!or!for!any!other!reasons.!Accepting!this!stricture,!
cities!can!be!approached!from!a!different!way,!and!one!that!is!particularly!suited!
to!economic!process.!This!involves!investigating!how!a!city!is!being!used!by!
people!who!reproduce!the!city!through!their!everyday!work.!This!moves!the!
subject!of!the!research!from!the!city!per!se!to!the!agents!using/making!the!city.!
In!the!case!of!studying!economic!globalization,!these!are!corporations.!This!
functional!focus!bypasses!the!definition!problem!because!it!lets!the!firms!decide!
what!the!city!is!in!the!process!of!choosing!to!locate!there.!This!is!the!approach!
adopted!in!the!empirical!section!of!this!Report.!
Theoretical!difficulties!of!global!urban!research!
!
Cities!are!not!simply!abstract!objects!to!be!measured;!they!are!complex!places!
where!people!live!and!thereby!form!attachments!to.!When!trying!to!understand!
cities!at!a!global!scale!the!latter!can!sometimes!pit!local!pride!against!outside!
intrusion.!At!the!heart!of!this!local!concern!is!a!presumption!that!cities!are!
competitive.!Thus!there!are!two!public!discourses!on!cities!in!globalization!
(Taylor!and!Derudder!2015).!One!that!is!hugely!concerned!with!city!rankings!
ranging!from!blogosphere!rants!about!underWappreciated!home!cities!through!to!
mayor’s!offices!asking!for!instructions!on!how!to!become!a!‘global!city’!or!least!
go!up!a!rung!or!two.!The!other!consists!of!academic!studies!of!world!or!global!
cities!that!profess!to!understand!the!seemingly!enhanced!role!of!cities!under!
conditions!of!contemporary!globalization.!The!discourses!are!not!as!distinctive!
as!might!be!expected;!there!is!a!fuzzy!boundary!in!the!policy!realm!wherein!
branding!is!becoming!important,!and!academic!case!studies!often!focus!on!the!
‘global!prospects’!of!the!studied!city!or!cities.!But!are!cities!really!intrinsically!
competitive?!The!ideas!and!results!presented!in!this!Report!are!built!in!
opposition!to!this:!mutuality!is!the!essence!of!interWcity!relations.!!!
!An!anecdote!will!explain!how!I!first!broke!free!from!the!competitive!
presumption.!When!the!Council!of!Ministers!agreed!to!locate!the!European!
Central!Bank!in!Frankfurt!there!was!much!speculation!in!the!financial!and!
business!press!that!this!might!be!the!first!step!in!Frankfurt!replacing!London!as!
Europe’s!prime!financial!centre.!Notwithstanding!that!London,!being!in!the!UK,!
was!physically!outside!the!Eurozone!(the!new!bank’s!jurisdiction)!and!therefore!
hardly!a!credible!ECB!candidate,!the!decision!was!seen!as!a!‘victory’!for!
Frankfurt.!On!the!basis!of!this!competition!discourse,!some!colleagues!and!I!were!
able!to!get!a!project!funded!by!the!AngloWGerman!Foundation!to!test!out!whether!
Frankfurt!was!indeed!‘catching!up’!(Beaverstock!et!al!2001).!However!as!soon!as!
we!started!interviewing!senior!bankers!and!lawyers!in!both!cities!we!found!that!
they!thought!the!whole!idea!of!Frankfurt!as!a!rival!to!London!to!be!preposterous.!
Furthermore,!nearly!everyone!interviewed!worked!for!firms!with!offices!in!both!
cities,!which!meant!that!it!was!in!firms’!interests!for!both!cities!to!be!successful.!
London!was!‘obviously’!the!global!centre!but!that!did!not!mean!Frankfurt!was!
unimportant,!its!offices!simply!had!different!functions!relating!to!EU,!central!
Europe!or!eastern!Europe!business.!As!one!respondent!put!it:!what’s!good!for!
London!is!good!for!Frankfurt!and!vice!versa.!Offices!within!the!same!firm!worked!
together,!each!providing!a!different!part!of!the!firm’s!overall!strategy.!This!was!
mutuality!not!competition.!The!situation!had!been!falsely!scripted!as!a!national!
competition!(German!city!versus!British!city)!when!in!reality!it!was!a!case!of!the!
ECB!properly!going!to!Frankfurt!to!enhance!existing!functions,!which!was!
viewed!as!benefitting!both!Frankfurt!and!London.!
!
The!erroneous!thesis!of!competition!between!London!and!Frankfurt!
encompassed!what!Jacobs!(2000)!has!called!the!‘Thing!Theory!of!Development”.!
This!assumes!that!economic!development!is!made!up!of!an!assemblage!of!things,!
and!cities!with!more!of!the!relevant!things!will!be!the!more!successful.!Therefore!
adding!things!automatically!enhances!a!place’s!development.!The!paucity!of!this!
approach!can!be!seen!in!state!development!failures!in!both!the!Second!and!Third!
Worlds!through!the!second!half!of!the!twentieth!century.!In!the!example!above!
the!ECB!might!be!considered!a!rather!‘big!thing’!but!simply!adding!it!to!
Frankfurt’s!assemblage!is!not!a!gameWchanger.!What!matters!for!development!is!
how!things!are!connected;!what!are!the!mechanisms!through!which!
development!occurs?!This!relational!approach!identifies!mutual!interWcity!
relations;!of!course!this!does!not!mean!we!found!no!competitive!relations!in!this!
study,!but!that!these!were!between!firms,!not!cities.!More!generally,!competition!
between!cities!is!a!contingent!matter,!and!is!typically!found!in!intraWstate!
situations!as!previously!suggested!in!answers!to!the!Central!Questions.!
!
The!lesson!of!the!anecdote!is!that!we!cannot!treat!interWcity!relations!as!
intrinsically!competitive;!how!we!consider!mutuality!and!competition!is!dealt!
with!below.!This!example!shows!that!it!is!important!to!set!out!clearly!the!
conceptual!grounding!of!the!Report!and!this!is!the!concern!of!Part!A.!Part!B!then!
presents!some!key!empirical!findings.!The!topic!of!this!Report!is!a!very!concrete!
matter!and!therefore!I!provide!manifold!examples!of!different!analyses!of!cities!
in!globalization.!However!the!way!in!which!cities!are!viewed!within!globalization!
is!considered!of!equivalent!worth!and!therefore!both!substantive!parts!of!the!
Report!are!meant!to!be!understood!as!equally!important.!!
Part!A!Conceptual!grounding:!globalizations,!cities!and!states!
!
I!set!out!the!Report’s!basic!terms!of!discussion:!first!how!I!interpret!economic!
globalization!with!particular!reference!to!the!changing!status!of!states;!second!I!
show!how!cities!fit!into!this!globalization!in!terms!of!networks!and!hierarchies;!
and!third!I!provide!a!framework!for!analysis!as!a!global!spaceWeconomy!in!which!
economic!globalization!develops!as!corporations!operating!through!a!world!of!
city/state!contradictions.!
Economic!globalization!
!
Economic!globalization!is!defined!as!a!set!of!economic!transactions!that!are!
worldwide!in!scope!and!integrated!to!create!a!world!economy.!Viewed!this!way!
there!have!been!three!such!processes!creating!distinctive!world!economies.!!
1. Imperial!globalization.!This!was!the!culmination!of!European!imperialism!
so!that!by!the!end!of!the!nineteenth!century!there!was!an!integrated!
world!economy!whose!global!scope!was!defined!by!imperial!relations,!
both!formal!(political!control)!and!informal!(dominant!economic!
influence),!whereby!the!rest!of!the!world!provided!European!countries!
(and!latterly!USA!and!Japan)!with!agricultural!commodities!and!raw!
materials.!In!effect!this!world!economy!was!a!global!functional!region!
with!simple!commodity!flows!from!the!periphery!servicing!a!North!
Atlantic!industrial!core.!
2. American!globalization.!The!USA!emerged!from!the!Second!World!War!
with!an!expanded!economy!when!all!rivals!had!different!degrees!of!
severely!warWdamaged!economies.!This!enabled!American!firms!to!
dominate!the!world!economy!in!an!‘Americanization’!that!restored!
European!and!Japanese!economies!in!the!‘postWwar!boom’.!This!had!two!
elements:!(i)!leading!American!firms!grew!to!become!‘multinational!
corporations’!through!having!production!units!located!in!different!
countries;!and!(ii)!leading!European!firms!emulated!American!
management!practices!and!technological!advances.!!
3. Corporate!globalization.!This!is!an!extension!of!Americanization!through!
numerous!nonWUS!firms!becoming!multinational!corporations,!with!
Japanese!and!German!firms!in!particular,!initially!challenging!American!
economic!dominance.!But!this!is!much!more!than!a!diffusion!of!American!
practices,!some!leading!firms!become!‘transnational!corporations’!and!
later!‘global!corporations’!through!realizing!the!new!organizational!
potential!of!the!technology!merger!between!the!communication!and!
computer!industries!in!the!1970s.!This!brought!the!integration!of!the!
world!economy!to!unparalleled!levels,!firmly!establishing!corporations!as!
the!dominant!players.!
Corporate!globalization!is!our!contemporary!globalization,!an!ongoing!process!of!
economic!integration!originally!focused!upon!three!main!‘globalization!areanas’:!
northern!America!(USA!plus!Canada),!western!Europe,!and!Pacific!Asia!(led!by!
Japan!and!not!including!China).!Now!it!involves!corporations!from!countries!
across!the!world,!importantly!including!China.!
!
Although!my!focus!will!be!on!corporate!globalization!it!is!important!to!note!that!
there!are!vestiges!of!previous!globalization!processes!that!remain!relevant:!
various!imperial!connections!are!still!discernable!in!today’s!world!economy!and!
American!corporations!remain!the!largest!national!group.!But!corporate!
globalization!is!very!distinctive.!This!was!initially!recognized!in!technocratic!
terms!with!the!communicationWcomputer!merger!heralding!‘the!end!of!
geography’!in!a!new!‘borderless!world’!(Brown!1973)!both!implying!the!demise!
of!states!as!major!players!in!the!world!economy.!But!this!is!very!misleading:!
states!are!not!disappearing;!rather!how!they!relate!to!the!encompassing!world!
economy!is!being!radically!transformed.!!
!
The!two!earlier!globalizations!were!international!with!interWstate!relations!at!the!
heart!of!the!worldwide!economic!relations.!In!contrast,!corporate!globalization!is!
premised!on!transnational!transactions,!with!myriad!economic!relations!
surpassing!states.!This!does!not!mean!that!states!have!become!irrelevant,!all!
economic!activity!is!ultimately!grounded!whatever!the!technology,!but!that!their!
unrivalled!dominance!of!the!world!economy!is!no!more.!This!can!be!seen!in!trade!
policy!where!free!trade/protection!debates!of!imperial!globalization!gave!way!to!
GATT!promotion!of!free!trade!in!American!globalization!–!both!were!
international!practices!–!that!contrasts!with!the!current!World!Trade!
Organization!which!provides!for!corporate!transnational!practices.!In!legal!
terms,!in!American!globalization!there!was!a!focus!on!human!rights!protecting!
individuals!from!actions!of!home!states,!in!corporate!globalization!the!focus!is!on!
corporate!rights!protecting!firms!from!actions!of!foreign!states.!In!political!
terms,!American!globalization!operated!through!social!compacts!within!
countries!W!in!the!USA!the!compact!between!‘big!capital’!and!‘big!labour’,!in!
Europe!the!creation!of!welfare!states!–!whereas!in!corporate!globalization!these!
national!compacts!are!replaced!by!unequal!relations!between!huge!transnational!
capital!and!multiple!little!‘national!labours’.!This!transnational!world!is!the!
habitat!of!the!resurgence!of!cities!as!major!players!in!a!global!economy.!
Cities!as!localHglobal!nexus!!
!
The!importance!of!cities!in!corporate!globalization!has!been!understood!in!three!
steps.!First!the!rise!of!multinational!corporations!was!identified!with!cities!as!
new!centres!of!power!by!Hymer!(1972);!second!this!was!seen!to!be!
operationalized!as!the!New!International!Division!of!Labour!whereby!industrial!
production,!traditionally!the!mark!of!‘developed!countries’!(Frobel!et!al!1979),!
was!being!transferred!to!poorer!countries;!and!third!this!new!economic!
decentralization!requiring!a!new!organizational!centralization!in!the!form!of!a!
world!city!hierarchy!(Friedmann!1986)!or!new!global!cities!(Sassen!1991).!This!
research!trajectory!ran!parallel!with!a!urban!policy!reactions!to!social!and!
economic!change!whereby!cities!were!initially!seen!as!part!of!‘the!problem’!in!
the!1970s!and!two!decades!later!were!commonly!heralded!as!part!of!!‘the!
solution’.!Hence!cities!are!now!generally!seen!to!have!crucial!roles!in!economic!
globalization.!
!Recently!there!have!been!a!large!number!of!academic!books!on!cities!and!their!
roles!in!contemporary!economic!development!(e.g.!Taylor!et!al!2011b;!Glaeser!
2011;!Scott!2012;!Derudder!et!al!2012;!Storper!2013;!Batty!2013;!Neale!2013;!
Taylor!2013;!Brenner!2014;!Taylor!and!Derudder!2015).!These!include!a!variety!
of!approaches;!in!this!Report!I!will!develop!ideas!derived!from!Jacobs’!(1969,!
1984,!2000)!theory!of!urban!economic!development.!The!reason!for!this!choice!
is!that!her!approach!directly!addresses!the!localWglobal!nexus!that!is!the!essence!
of!successful!contemporary!cities.!In!this!her!work!engages!directly!with!the!
process!of!economic!globalization!by!uniquely!combining!internal!relations!of!
cities!(agglomeration)!(Fujita!and!Thisse!2002)!with!external!relations!of!cities!
(connectivity)!(Taylor!2004).!These!are!the!special!economic!assets!of!cities,!
cluster!externalities!and!network!externalities!respectively!(Hicks!1969).!Both!
relations!are!realized!in!terms!of!communications;!agglomeration!provides!
dense!communication!and!connectivity!provides!diverse!communication!(Taylor!
2013).!Therefore!cities!are!inherently!knowledgeWrich!milieu!and!never!more!so!
than!under!conditions!of!contemporary!globalization.!
!
Jacobs!(1969)!provides!a!generic!process!of!economic!development.!Economic!
change!is!the!result!of!two!master!economic!processes,!innovation!and!import!
replacement,!which!are!both!features!of!city!creativity.!In!this!argument!
innovation!is!a!function!of!the!size!and!complexity!of!cities,!where!urban!
problems!generate!new!demands!that!only!these!creative!places!can!satisfy!
through!new!production!and!consumption.!Import!replacing!derives!from!the!
diffusion!of!innovations!through!city!networks!of!creative!places,!where!
innovations!can!be!improvised!for!local!production!and!consumption.!Both!
processes!generate!new!work!thereby!increasing!the!complexity!of!a!city’s!
division!of!labour.!It!is!this!that!defines!economic!development!as!a!special!case!
of!economic!growth.!An!economy!can!grow!by!just!increasing!what!is!already!
being!produced!–!adding!more!old!work!to!existing!old!work!such!as!doubling!
the!output!of!a!factory!–!but!this!does!not!diversify!a!city’s!division!of!labour!and!
hence!does!not!qualify!as!development.!Thus!cities!are!special!settlements!
because!of!complex!dynamic!divisions!of!labour!resulting!from!their!innovations!
and!import!replacements.!It!is!this!specialWness!that!has!been!both!a!cause!and!a!
consequence!of!globalizations!during!the!unprecedented!urban!expansion!of!the!
last!200!years.!!!
!
It!has!been!noted!that!the!emergence!of!corporate!globalization!derived!from!the!
new!instantaneous!global!communication!opportunities!opening!up!in!the!1970s.!
Initially,!firms!developed!production!strategies!whereby!they!could!take!
advantage!of!lowWcost!transport!and!cheap!labour!to!forge!global!commodity!
chains!for!secondary!sector!production.!This!stimulated!a!globalization!of!
tertiary!services!by!firms!providing!financial,!professional!and!creative!services!
for!their!globalizing!corporate!clients;!in!the!1980s!they!followed!clients!to!new!
markets!and!thereby!exported!their!services!through!new!offices!across!the!
world.!By!the!early!1990s!service!firms’!intranets!crissWcrossed!the!world!as!
flows!of!expert!knowledge!to!support!corporate!globalization.!Very!quickly!these!
service!firms!moved!on!from!being!corporate!followers!to!becoming!corporate!
players!in!their!own!right:!finding!themselves!in!new!markets!they!soon!
produced!their!own!global!office!strategies.!By!the!turn!of!the!new!century!these!
knowledge!flows!in!and!through!cities!reached!new!levels!of!density!and!
diversity;!according!to!Castells!(1996)!we!are!living!in!an!‘informational!world’,!a!
global!network!society!where!these!‘advanced!producer!services’!had!become!
part!of!a!new!‘quaternary!sector’!of!the!corporate!world!economy.!
!
The!corporations!providing!advanced!producer!services!are!to!be!found!in!the!
internal!agglomeration!of!major!cities!across!the!world!in!their!hallmark!clusters!
of!skyscrapers!connected!by!satellite!dishes!in!worldwide!infrastructure!
networks.!The!result!is!a!dynamic!world!city!network!of!global!service!centres!
enabling!economic!globalization.!In!Sassen’s!(1991)!global!cities!thesis!service!
production!and!consumption!come!together:!markets!for!advanced!producer!
services!(corporate!headquarters)!in!global!cities!are!serviced!by!financial,!
professional!and!creative!corporate!providers!in!global!cities.!But!since!both!sets!
of!corporations!pursue!global!strategies!it!is!the!network!of!cities!as!global!
service!centres!that!constitute!the!global!framework!to!make!economic!
globalization!possible.!Thus!most!of!the!empirical!material!that!follows!will!focus!
on!service!corporations!and!how!they!use!cities!in!their!everyday!work.!It!should!
be!noted!that!this!choice!of!economic!sector!is!based!on!its!strategic!importance!
not!on!corporate!size!–!except!in!financial!services!most!service!corporates!are!
relatively!modest!in!size.!One!way!of!looking!at!them!is!to!interpret!advanced!
producer!services!as!the!‘indicator!sector’!in!the!current!world!economy.!By!
analogy!with!an!‘indicator!species’!in!ecological!habitats,!the!success!of!this!
indicator!sector!in!the!today’s!city!habitats!is!a!pointer!to!successful!economic!
development.!
!
Finally,!there!are!three!related!consequences!of!the!approach!I!am!taking!in!this!
Report.!First,!note!that!the!network!makers!in!my!argument!are!firms!carry!out!
their!corporate!servicing!work!and!NOT!the!cities!per!se,!as!represented!by!their!
local!governments!or!administrations.!The!Report!does!not!envisage!a!‘mayors!
ruling!the!world’!scenario,!the!process!of!economic!globalization!is!not!a!result!of!
local!political!policy!making!but!rather!it!is!the!outcome!of!global!corporate!
location!decision!making.!Second,!there!is!the!question!of!economic!
specialization!versus!diversity!in!cities.!Sector!and!geographical!concentration!of!
economic!knowledge!has!both!advantages!and!dangers!for!cities.!In!the!case!of!
advanced!producer!services!all!major!cities!engage!in!the!process!but!in!two!
different!ways.!A!few!cities,!Sassen!calls!then!‘global!cities’,!specialise!deeply!in!
the!production!of!these!services!but!in!addition!there!is!a!much!larger!number!of!
cities!–!numbered!in!hundreds!–!that!have!a!sufficiency!in!this!service!provision!
so!as!not!to!be!too!dependent!of!the!‘global!cities’.!There!is!no!clear!and!simple!
line!between!these!two!servicing!roles!of!cities.!However!it!should!be!noted!that!
global!city!formation!does!not!produce!specialization!in!the!way!Detroit!
specializes!in!car!making;!in!other!words,!advanced!producer!services!generally!
fit!into!a!much!broader!and!diverse!urban!economy.!Third!and!following!on!from!
the!last!point,!the!development!of!advanced!producer!services!is!just!one!process!
among!a!myriad!of!processes!that!constitute!a!dynamic!economically!successful!
city.!It!is!highlighted!here!because!it!informs!cities’!role!in!economic!
globalization,!but!there!are!important!onWgoing!processes!at!other!scales!notably!
national!capital!functions!for!most!major!cities!across!the!world,!and!regional!
central!place!functions!(retail!and!culture)!are!ubiquitous!for!all!cities.!This!
Report!deals!with!cities’!global!roles,!whose!importance!will!vary!across!major!
cities!in!relation!to!other!roles.!
Global!spaceHeconomy!
!
The!roles!of!cities!in!economic!globalization!cannot!be!studied!solely!as!global!
servicing!of!corporations!in!a!pure!commercial!landscape.!To!be!sure!global!law!
firms!draw!up!contracts!for!their!clients!to!make!agreements!as!if!being!in!the!
fabled!‘borderless!world’:!multinational!contracts!by!corporate!lawyers!bring!
together!different!national!law!codes!and!convert!them!into!one!of!two!master!
codes!(English!common!law!or!New!York!state!law).!But!equally,!different!
service!providers,!accountants!and!other!financial!advisors,!design!‘tax!
efficiency’!strategies!for!clients!that!use!political!boundaries!to!separate!sales!
from!profits,!which!at!the!criminal!end!of!the!spectrum!is!called!money!
laundering.!Corporate!globalization!may!be!premised!on!transnational!practices!
but!that!does!not!mean!states!and!their!boundaries!do!not!remain!important.!My!
way!of!dealing!with!this!political!dimension!in!economic!globalization!is!to!
consider!the!roles!of!cities!within!a!global!spaceWeconomy.!
!
The!global!spaceWeconomy!is!conceived!as!a!cityWcentric!economic!process!but!
one!in!which!states!have!an!important!role!to!play.!States!remain!economic!
powers!but!in!a!very!different!way!to!cities.!Modern!states!are!territorial!political!
entities!that!are!able!to!control!flows!of!economic!factors!through!their!
boundary,!regulate!economic!factors!within!their!territory,!and!manage!a!budget!
that!attempts!to!balance!the!effects!of!these!extraW!and!intraWterritorial!practices.!
Thus!states!do!not!directly!generate!economic!development!like!cities,!but!they!
do!wield!critical!economic!authority;!for!instance,!the!activities!of!all!advanced!
producer!service!firms!are!regulated!state!by!state.!I!refer!to!these!territorial!
powers!as!state!economic!jurisdictions!(SEJs),!which,!along!with!economic!
development!through!cities,!is!a!necessary!component!of!the!global!spaceW economy.!
!
The!global!spaceWeconomy!consists!of!the!interaction!of!two!spaces:!spaces!of!
flows!centred!on!cities!and!spaces!of!places!constituted!by!SEJs.!This!is!a!biW layered!model!with!a!mosaic!map!of!political!places!set!upon!a!route!map!of!
economic!flows.!The!dynamic!of!the!former!consists!of!policies!such!as!tariff!
rates!and!labour!laws!enacted!by!governments;!the!dynamic!of!the!latter!is!
agglomeration!and!connectivity!processes!engaged!by!firms.!I!use!the!
hyphenated!‘biWlayered’!instead!of!the!simpler!‘two!layers’!to!emphasize!the!
integral!links!between!the!maps;!the!model!consists!of!three!megaWprocesses:!(i)!
mosaic!space!construction!and!maintenance,!(ii)!connectivity!space!construction!
and!maintenance,!and!(iii)!their!interaction!as!an!entwining!of!both!
constructions!and!maintenances.!The!former!two!exhibit!great!varieties!in!
practice!–!different!deployments!of!both!public!and!private!powers!
characterising!states!(Rokkan!1980);!different!types!of!flows!as!networks,!
chains,!and!circuits!crossing!borders!(Coe!et!al!2010;!Derudder!and!Witlox!2010)!
–!but!the!essence!of!the!model!is!the!critical!interaction!of!place!and!flow.!This!is!
what!both!the!lawyers!and!accountants!referred!to!above!are!both!engaging!with!
using!their!professional!knowledge!to!advantage!their!corporate!clients.!
!
The!operation!of!the!biWlayered!model!is!shown!in!Figure!1.!Derived!from!a!study!
commissioned!by!Mastercard!this!graph!compares!the!relative!commercial!
attractiveness!of!individual!of!cities!to!that!of!their!respective!countries.!Using!90!
different!measures!across!75!leading!cities,!there!are!different!measures!for!both!
city!and!country!attributes.!For!instance,!indices!relating!to!‘livability’!were!for!
cities!but!legal!framework!was!indexed!by!country.!In!all!there!were!50!
measurements!on!countries,!30!measures!on!cities!and!10!mixed.!From!these!
data!each!city’s!individual!measures!can!be!separated!from!the!attributes!of!the!
country!it!is!located!in:!Figure!1!arrays!these!two!measures!for!each!city.!The!
resulting!distribution!of!cities!shows!a!peculiar!pattern!with!the!bottom!right!of!
the!graph!empty:!there!are!no!cities!considered!good!for!business!to!be!found!in!
countries!considered!bad!for!business.!The!leading!world!cities!are!located!in!the!
top!right!of!the!graph!W!these!all!have!the!best!of!both!worlds:!they!are!attractive!
cities!in!countries!attractive!to!commerce!In!contrast,!in!the!bottom!left!there!are!
cities!unattractive!to!business!both!individually!and!because!of!the!country!they!
are!in.!However!the!top!left!is!the!most!interesting!part!of!the!graph.!Here!are!
found!two!types!of!cities;!those!whose!attractiveness!is!largely!due!to!the!
country!they!are!in,!and!other!cities!that!are!relative!attractive!despite!the!
country!they!are!in.!This!is!easily!interpreted!geographically.!It!is!in!poorer!parts!
of!the!world,!where!state!structures!are!relatively!weaker!and!less!amenable!to!
commerce,!that!cities!are!held!back!by!their!countries!in!terms!of!attracting!
business.!For!understanding!global!location!decisionWmaking!this!produces!the!
intriguing!suggestion!that!firms’!location!decisions!in!richer!parts!of!the!world!
will!be!based!upon!city!attributes!whereas!decisions!in!poorer!parts!of!the!world!
are!likely!based!on!state!attributes.!In!other!words!city!and!state!have!different!
saliences!in!different!parts!of!the!global!spaceWeconomy.!
!
The!above!study!confirms!the!relative!importance!of!states!in!the!global!spaceW economy!but!should!not!be!interpreted!as!undermining!the!cityWcentric!nature!of!
corporate!globalization.!The!case!of!Hong!Kong’s!remarkable!economic!success!
over!the!last!halfWcentury!success!is!relevant!here.!Certainly!its!political!
circumstances!do!not!appear!to!be!at!all!auspicious!as!a!platform!for!economic!
success.!Until!1997!it!was!a!British!colony,!after!which!its!political!control!was!
transferred!to!China.!From!an!imperial!relict!to!becoming!part!of!a!communist!
state!is!not!a!political!path!expected!of!a!very!successful!city!in!corporate!
globalization.!But!it!was!successful!–!why?!For!cities!to!be!successful!a!key!need!
is!relative!economic!autonomy,!irrespective!of!the!prevailing!political!
organization.!And!this!is!precisely!what!Hong!Kong!has!experienced.!Under!the!
British!there!was!the!‘pomp!and!ceremony’!of!imperial!rule!while!the!local!
Chinese!concentrated!on!making!money.!And!the!Chinese!communists!were!
simply!pragmatic:!why!kill!a!goose!laying!a!golden!egg?!They!gave!Hong!Kong!
separate!administrative!status!in!their!‘one!country,!two!systems’!formula,!
reserving!political!power!to!Beijing!but!otherwise!leaving!the!economic!process!
alone.!Thus!curiously,!Hong!Kong’s!unusual!political!path!has!actually!been!ideal!
in!providing!a!key!economic!space!for!corporations!to!locate!and!create!a!
globally!connected!city.!!
Part!B! Main!text:!cities!in!the!world!city!network!
!
The!empirical!results!below!are!compiled!from!an!onWgoing!research!programme!
carried!out!under!the!auspices!of!the!Globalization!and!World!Cities!(GaWC)!
Research!Network!(www.lboro.ac.uk/gawc)!since!1998.!The!subject!of!these!
studies!is!interWcity!relations!and!therefore!the!focus!is!on!connectivity!rather!
than!agglomeration!in!the!specific!economic!advantages!of!cities.!This!is!entirely!
appropriate!for!this!Report!since!results!highlight!the!worldwide!roles!of!cities!in!
contemporary!globalization.!!
!
The!research!is!premised!on!an!interlocking!network!model!whereby!advanced!
producer!service!firms!‘interlock’!cities!through!their!workWflows!(of!ideas!
involving!information,!knowledge,!professional!knowhow,!plans,!strategies,!
direction,!etc.)!across!worldwide!office!networks!(Taylor!2001;!Derudder!and!
Parnreiter!2014).!Since!data!on!this!commercial!work!is!impossible!to!access!(for!
both!confidentiality!and!sheer!scale!reasons)!direct!measurement!of!workWflows!
is!impossible;!the!model!enables!indirect!measurement!of!workWflows!in!the!
form!of!estimates!of!potential!flows!between!individual!offices!within!firms.!
These!are!simply!based!on!the!idea!that!more!important!offices!generate!more!
workWflows;!there!are!more!flows!within!a!firm!between!two!cities!with!
important!offices!than!between!two!cities!with!less!important!offices.!
Importance!is!measured!by!size!and!function!of!a!firm’s!office!in!a!given!city.!The!
workWflows!through!a!single!firm’s!office!network!are!estimated;!the!aggregation!
of!many!firms’!flows!constitute!the!world!city!network!as!estimates!of!gross!
flows!between!cities!servicing!corporations!across!the!world.!A!basic!outline!of!
the!model!is!provided!in!the!Appendix.!
!
This!strategy!of!indirect!measurement!relies!on!there!being!easily!available!data!
to!operationalize!the!model.!In!this!case!information!from!firms’!websites!about!
their!offices!(i.e.!in!selling!their!‘global!capacity’!to!clients)!is!used.!For!each!firm!
the!question!asked!is!how!the!firm!‘uses’!a!given!city:!a!scale!from!0!(no!
presence)!to!5!(headquarter!location)!has!been!devised!with!intervening!scores!
being!2!for!a!typical!office!of!a!firm,!1!where!there!is!something!less!than!typical!
service!(usually!small!size),!3!is!an!unusually!large!office,!and!4!indicates!an!
office!with!nonWlocal!functions!(e.g.!regional!HQ).!These!scores!are!termed!the!
service!values!of!cities!for!firms.!Such!data!has!been!collected!in!2000,!2004,!
2008,!2010!and!2013,!originally!for!100!firms!in!315!cities!and!since!2008!for!
175!firms!in!526!cities.!Thus!the!latest!service!values!matrix!arrays!175!firms!
against!526!cities!featuring!92,050!pieces!of!information.!The!roster!of!firms!is!
made!up!of!the!largest!firms!in!!financial!services!(75),!accountancy!(25),!
advertising!(25),!law!(25)!and!management!consultancy!(25).!!
!
This!Report!presents!three!types!of!results!from!analyses!of!these!data!
1. The!basic!measure!is!the!aggregate!of!all!potential!workWflows!of!a!city,!
which!defines!its!global!network!connectivity.!In!all!this!research!London!
is!found!to!have!the!highest!level!of!connectivity.!For!ease!of!comparison,!
results!for!other!cities!are!presented!as!percentages!of!London’s!score.!
2. Within!the!aggregate!result!there!are!myriad!cityWdyad!connections!as!
sums!of!office!workWflows!between!pairs!of!cities.!From!these!results,!each!
city’s!geographical!orientation!can!be!illustrated!–!where!(which!cities)!it!
is!strongly!connected!to,!and!where!it!is!weakly!connected.!
3. The!service!values!matrix!can!be!simplified!using!a!principal!components!
analysis!to!indicate!the!underlying!structure!of!the!workWflows.!Such!
analyses!have!indicated!resilient!regional!structures!within!the!overall!
economic!globalization.!
In!what!follows!I!draw!on!results!presented!in!Taylor!(2004),!Taylor!et!al!
(2011b,!2013,!2014a,!2014b)!and!Taylor!and!Derudder!(2015).!This!compilation!
does!tend!to!focus!on!the!roles!of!major!cities!in!economic!globalization!but,!as!
the!size!of!the!service!values!matrix!indicates,!smaller!cities!are!also!featured!not!
least!to!contrast!with!their!more!important!peers.!
Global!network!connectivities!of!cities,!2000H2013!
!
The!initial!result!of!world!city!network!analyses!are!the!global!network!
connectivities!(GNC)!of!cities.!These!provide!a!ranking!of!cities!in!terms!of!their!
degrees!of!integration!into!the!network.!Although!use!of!such!results!commonly!
focuses!on!the!position!of!a!given!city!of!interest,!the!real!value!of!the!analyses!is!
to!be!found!in!the!possibilities!for!numerous!comparisons!between!cities.!Given!
that!this!measurement!exercise!has!been!carried!out!since!2000,!longitudinal!
comparisons!can!be!made!to!show!the!trajectories!of!cities!in!the!developing!
network.!Here!I!focus!on!the!top!20!cities!in!terms!of!GNC!in!2000!and!2013:!
Table!1!lists!the!leading!cities!in!2000!and!2013;!Table!2!shows!changes!in!GNCs!
for!these!cities!from!2000!to!2013.!
!
The$following$statements$can$be$derived$from$these$results$
The&world&city&network&appears&to&be&very&resilient.&Despite&major&
movements&in&the&world&economy&over&the&period&in&question&
(dot.com&bubble&–&rapid&expansion&–&severe&crisis&–&austerity),&there&
are&only&five&changes&in&the&top&20s&&&
This&resilience&is&especially&marked&at&the&top&of&the&ranking.&
London&and&New&York&remain&by&far&the&most&connected&cities,&
followed&by&Hong&Kong&and&Paris&in&both&lists&
Cities&from&‘emerging&markets’&are&among&these&leading&cities:&Sao&
Paulo&and&Mexico&City&appear&in&both&lists&and&they&are&joined&by&
Mumbai,&Shanghai,&Moscow&and&Beijing&in&2013&
The&latter&represent&important&changes&that&are&occurring&in&the&
world&city&network:&a&‘west’&to&‘east’&shift.&This&is&especially&shown&in&
the&changes&with&western&European&and&US&cities&showing&relative&
decline&compared&to&Asian&cities.&The&swapping&of&positions&between&
Toronto&and&Sydney&is&part&of&this&broader&pattern&
A&key&outcome&of&this&shift&is&the&remarkable&position&of&Chinese&
cities&in&the&top&echelons&of&the&network&with&three&of&the&top&8&cities&
in&2013&
In&total&contrast&there&are&two&Pacific&Asian&cities&that&have&the&
largest&relative&decline:&Tokyo&and&Taipei.&The&former&reflects&the&
Japanese&economy’s&opposite&trajectory&to&that&of&China;&the&latter&is&
a&special&case&of&a&Chinese&city&politically&separate&from&China&and&
thereby&suffering&as&a&consequence&
Finally&mention&should&be&made&of&Dubai&that&records&by&far&the&
highest&relative&increase&in&GNC.&Partly&due&to&a&low&starting&point,&
this&is&nevertheless&a&remarkable&trajectory&that&will&warrant&
further&consideration&
!
Discussion!!
These!findings!are!consistent!with!what!we!know!from!other!analyses!and!
commentaries!on!recent!changes!in!the!world!economy.!What!is!added!by!Tables!
1!and!2!are!specific!measurements!of!stabilities!and!movements!of!leading!cities.!
But!this!is!only!the!starting!point!of!world!city!network!analyses,!really!just!the!
tip!of!an!iceberg!about!roles!of!cities!in!economic!globalization.!
Cities!in!global!regions!
!
One!consistent!finding!in!analyses!of!the!service!values!matrix!is!that!economic!
globalization!is!highly!regionalized.!This!is!in!keeping!with!the!fact!that!
transnational!firms!have!typically!expanded!the!scope!of!their!business!initially!
from!national!origins!to!neighbouring!countries!and!this!is!still!reflected!in!
today’s!office!networks!(Dicken!2010).!The!result!is!a!complex!global!regional!
structure!of!service!provision.!!Here!I!report!on!a!very!interesting!regionalization!
derived!from!the!2010!data!(Taylor!et!al!2013).!
!
A!principal!components!analysis!of!these!data!reduces!the!service!values!of!175!
firms!into!components!scores!of!just!10!common!regional!patterns!of!service!
provision.!But!these!servicing!regions!do!not!make!up!the!typical!mosaic!pattern!
we!expect!in!regional!analyses;!our!global!regions!are!created!by!firms!that!are!
making!networks!not!boundaries.!Thus!there!are!unusual!features!such!as!some!
overlapping.!Figure!2!is!a!cartogram!showing!the!regions!and!their!overlaps!
indicated!by!dotted!lines,!for!instance!Chinese!cities!are!located!in!both!the!
Pacific!Asia!region!and!the!China!region.!The!regions!vary!in!overall!importance;!
two!are!dominant,!there!are!three!other!important!regions!and!five!lesser!
regions!all!identified!by!varying!font!size!on!Figure!2.!The!two!dominant!regions!
share!the!same!regional!identification!that!has!been!coined!specifically!for!this!
analysis:!USAL!refers!to!the!“USA!plus!London”!because!London!is!so!closely!
integrated!to!the!USA!in!very!many!firms’!provision!of!transnational!services.!In!
Figure!2!it!is!London!only!that!creates!the!overlap!between!Europe!and!the!two!
USAL!regional!frameworks.!In!this!analysis!USAL!is!home!to!two!different!
regional!patterns!of!service!provisioning!(i.e.!there!is!a!complete!regional!
overlap).!This!is!possible!because!of!the!key!and!unique!feature!of!this!
regionalization:!each!regional!structure!is!constituted!in!two!parts:!cities!in!the!
home!region!(which!provides!the!region’s!name!shown!in!Figure!2)!and!cities!in!
a!global!outreach!(which!confirms!each!region!having!a!worldwide!span).!Thus!
the!two!USAL!regions!share!a!homeWregion!but!have!contrasting!outreaches.!!
!
The!ten!regions!are!briefly!described!in!Table!3!where!the!leading!cities!in!homeW regions!and!global!outreaches!are!given.!These!are!all!largely!as!might!be!
expected.!In!addition,!the!table!divides!the!regions!into!two!groups!in!terms!of!
the!relationship!between!their!respective!homeWregions!and!global!outreach.!In!
four!regions!more!cities!feature!in!the!homeWregion!than!in!global!outreach!with!
consequent!more!servicing!in!the!homeWregion!compared!to!global!outreach.!
This!is!interpreted!as!an!intensive!globalization!process.!The!opposite!
arrangement!shows!an!extensive!globalization!process!defining!six!regions,!the!
five!lesser!regions!plus!USAL!Extensive.!The!latter!is!an!almost!perfect!mirror!
image!of!USAL!Intensive!and!this!dominant!pair!of!regions!shows!how!the!two!
different!globalizations!are!being!constructed.!The!intensive!process!results!from!
global!law!firms!and!investment!banking!where!office!location!tends!to!be!
focused!on!key!cities,!whereas!the!extensive!process!results!accountancy!
especially,!but!also!advertising!and!some!other!financial!services!and!
management!consultancies,!where!offices!are!broadly!spread!across!the!world.!!
!
What!does!all!this!mean!for!understanding!the!roles!of!individual!cities!in!
economic!globalization?!This!analysis!enables!measurement!of!the!geography!of!
a!city’s!position!amongst!the!various!regional!frameworks.!Specifically!it!enables!
identification!of!the!varying!strengths!of!a!city!in!servicing!in!different!regions.!
These!are!shown!in!Table!4!for!the!top!20!GNC!cities!in!2010.!Not!all!regions!are!
listed!for!each!city;!the!focus!is!on!specifically!strong!and!weak!orientations.!
These!results!can!be!interpreted!as!where!a!city’s!service!complex!is!biased!and!
where!there!appears!to!be!dearth!in!servicing.!For!instance,!corporations!in!
Dubai!doing!business!in!Europe!will!have!better!and!more!services!to!draw!on!
locally!than!when!doing!business!in!China.!This!presumably!reflects!current!
demands!for!servicing!but!it!also!has!implications!for!future!business!since!
regions!served!will!have!different!growth!potentials.!
!
The$following$statements$can$be$derived$from$these$results$
Fifteen&of&the&twenty&cities&record&a&strength&in&at&least&one&of&the&
USAL®ional&frameworks&confirming&the&overall&importance&of&
these&two&structures&
The&three&leading&cities,&London,&New&York&and&Hong&Kong,&are&the&
only&ones&to&show&no&weak®ional&links&
Neither&London&nor&Hong&Kong&are&leading&cities&in&a®ional&
framework&whereas&New&York&is&the&leading&city&in&two&frames;&
however&London&and&Hong&Kong&record&more®ional&strengths,&
eight&and&six&to&New&York’s&five&&
Of&the&42&weaknesses&recorded,&only&five&are&with&intensive®ions:&
Chicago&in&Pacific&Asia,&Sydney&in&Europe,&Mumbai&with&USAL&
Intensive,&Los&Angeles&in&Europe&and&Moscow&in&the&Americas&&
By&definition&all&cities&should&be&strong&in&their&home@region&but&this&
has&a&variety&of&implications:&Dubai&and&Mumbai&have&no&global&
home@region&in&this&framework,&whereas&London&and&US&cities&have&
have&three&(but&New&York&and&Los&Angeles&do¬&show&strengths&in&
the&Americas®ion)&
Three&cities&stand&out&for&having&few®ional&strengths:&both&Tokyo&
and&Los&Angeles&have&just&two,&including&a&home@region;&Chicago,&
Sydney,&Frankfurt&and&Mexico&City&have&only&three&strengths,&for&
Chicago&they&are&all&home@regions,&for&Mexico&City&there&are&two&
home@regions,&and&there&are&one&each&for&Sydney&and&Frankfurt&&
There&are&four&cities&strong&in&both&USAL®ions:&London,&New&York&
and&Chicago&as&home@regions&plus&Paris,&but¬&including&Los&
Angeles&which&is¬&strong&in&USAL&Extensive&
There&are&three&cities&with&four&or&more®ional&weaknesses:&
Chicago&with&six,&and&Sydney&and&Los&Angeles&with&four&
Apart&from&the&three&China&cities&(Hong&Kong,&Shanghai&and&Beijing),&
there&are&no&cities&with&strengths&in&both&Pacific&Asia&and&China&
regions;&the&two&other&Pacific&Asia&cities&(Tokyo&and&Singapore)&do&
not&show&China&strengths&&&
London&and&New&York&have&stronger&China&links&than&with&Pacific&
Asia,&a&feature&shared&only&with&Chicago&and&Mumbai;&Paris,&Dubai,&
Sydney,&Toronto,&Sao&Paulo,&Madrid,&Los&Angeles,&Moscow&and&
Frankfurt&are&all&reported&as&having&a&bias&towards&Pacific&Asia&
compared&to&China&
&
Discussion!
The!results!show!the!provenance!of!corporate!globalization!from!
Americanization!with!the!domination!of!the!two!USAL!regional!frameworks.!The!
integration!of!London!into!this!frame!derives!from!London’s!role!in!the!move!
from!an!international!to!transnational!globalization!through!its!leading!role!in!
the!postwar!Eurodollar!market!culminating!in!liberalizing!the!City!(“Big!Bang”)!
in!the!1980s.!Perhaps!less!likely!but!not!unexpected!given!earlier!analyses,!
corporate!globalization!is!also!shown!to!have!an!imperial!legacy!with!two!
‘Commonwealth’!frames!through!Sydney!and!Toronto,!in!which!London!and!
Mumbai!feature!strongly!in!both,!and!Hong!Kong!and!Singapore!in!one!(i.e.!six!
out!of!the!top!20!cities!include!this!imperial!heritage!link).!!
!
The!results!further!engage!with!the!changes!happening!in!Pacific!Asia.!The!latter!
region!is!reported!in!initial!regional!analyses!(from!2000)!and!is!joined!by!a!
separate!overlapping!China!region!in!2010.!The!Pacific!Asia!region!led!by!Tokyo!
was!an!initial!key!component!of!corporate!globalization!beyond!the!North!
Atlantic!economic!core!so!that!Tokyo!was!one!of!the!three!archetypal!‘global!
cities’!identified!by!Sassen!(2001).!This!arrangement!is!being!superseded!by!the!
rise!of!China!cities!confirming!Hong!Kong!as!Asia’s!‘global!partner’!of!London!and!
New!York.!This!makes!the!Pacific!Asia/China!link!comparisons!very!interesting!
with!London!and!New!York!more!strongly!related!to!China!cities!compared!to!
other!cities!outside!the!region!who!remain!more!Pacific!Asia!in!orientation.!
Tokyo!now!joins!US!cities!Los!Angeles!and!Chicago!in!being!relatively!parochial,!
a!feature!that!is!also!reflected!in!the!other!US!city,!New!York,!having!many!fewer!
regional!strengths!than!London,!as!well!as!less!than!Hong!Kong.!
!
Finally,!the!‘third!pillar’!of!contemporary!globalization,!Europe,!has!been!mainly!
present!in!the!discussion!through!mentions!of!London.!It!is!represented!in!these!
results!by!its!own!regional!framework!plus!a!small!region,!separate!and!not!
overlapping,!in!its!northern!fringe.!The!former!is!extremely!intensive!at!the!level!
of!USAL!Intensive,!but!without!the!compensation!of!a!parallel!USAL!Extensive!–!
Scandinavia!although!extensive!is!both!small!and!separate.!This!nature!of!
Europe’s!cities!in!the!world!city!network!will!be!explored!more!specifically!later.!!
Global!strategic!places!
!
In!introducing!the!concept!of!global!cities,!Sassen!(1991)!viewed!them!as!
‘strategic!places’!in!the!world!economy.!The!previous!results!have!hinted!at!this!
eventuality!and!this!is!explored!specifically!here.!However!Sassen!viewed!global!
cities!in!a!hierarchical!structure!drawing!partly!on!Friedmann’s!(1986)!‘world!
city!hierarchy’!where!New!York,!London!and!Tokyo!were!viewed!as!the!‘primary’!
control!and!command!centres!atop!the!hierarchy.!However,!as!Pred!(1977)!
showed!long!ago,!the!way!businesses!interact!with!cities!is!never!that!simple:!
there!are!myriad!crissWcrossings!of!intraWfirm!directives!that!belie!a!simple!
hierarchical!structure.!For!instance,!in!today’s!world!economy!London!is!the!
leading!European!city!but!there!is!no!general!sense!of!London!directing!other!
European!cities.!French!advertising!agencies!in!Paris!direct!the!strategy!of!their!
London!offices,!as!similarly!German!banks!in!Frankfurt!have!overall!authority!
over!their!London!branches.!This!complexity!is!better!accommodated!by!the!
network!approach!adopted!in!this!Report;!as!argued!in!Part!A!the!world!city!
network!is!best!viewed!as!a!network!with!hierarchical!tendencies.!This!has!an!
important!implication!for!analysis:!networks!are!constituted!as!nodes!and!links,!
which!require!equal!consideration.!Thus!as!well!as!focusing!on!cities!(nodes),!
there!should!be!corresponding!treatment!of!cityWdyads!(links).!This!is!
particularly!apposite!for!studying!strategic!places!since!the!places!(cities!as!
nodes)!are!only!strategic!because!of!their!connections!(cityWdyads!as!links).!!
!
The!relative!strategicWness!of!cities!can!be!viewed!through!the!standings!of!a!
city’s!main!partners.!In!Table!5!the!top!twenty!cities!for!2010!in!terms!of!GNC!are!
listed!in!terms!of!the!number!of!times!they!are!members!of!the!forty!most!
important!cityWdyads.!This!is!a!basic!measure!of!dyadic!strategicWness:!it!shows!
which!cities!have!more!or!less!salient!connections!within!the!world!city!network.!
The!results!are!quite!stark!in!identifying!which!cities!appear!strategic!and!which!
do!not.!There!is!a!general!trend!for!cities!with!higher!GNC!to!be!more!strategic,!
exemplified!by!New!York!and!London.!But!the!trend!is!not!a!smooth!one:!Dubai!
records!no!strategic!links!despite!a!GNC!rank!of!9th!whereas!Frankfurt!ranked!
19th!by!GNC!has!eight!such!links.!These!differences!between!strategicWness!and!
GNC!have!been!explored!through!two!different!analyses.!
!
In!the!first!place,!the!idea!of!there!being!two!globalization!processes!through!
cities,!intensive!and!extensive,!was!first!identified!in!a!cityWdyad!analysis!of!the!
2008!service!values!matrix!(Taylor!et!al!2014b).!A!principal!components!analysis!
conducted!on!a!27,966!cityWdyads!x!5!service!sectors!produced!the!two!
globalizations.!Focusing!on!the!cityWdyads!with!the!highest!50!component!scores!
in!each!globalization,!cities!are!arrayed!by!their!frequency!of!membership!of!
these!dyads!in!Table!6.!As!usual!London!and!New!York!dominate!each!list;!other!
cities!confirm!differences!between!the!two!globalization!previously!reported.!
The!Frankfurt/Dubai!contrast!is!repeated!with!the!former!important!in!intensive!
globalization!while!the!latter!does!not!appear!in!either!globalization.!In!general,!
intensive!globalization!includes!cityWdyads!featuring!more!important!cities,!
whereas!extensive!globalization!bring!in!a!range!of!less!important!cities.!
However!there!are!seven!cities!that!appear!in!both!lists;!this!straddling!the!two!
globalizations!can!be!thought!of!as!a!preliminary!indication!of!a!strategicWness!
interceding!across!globalizations.!
!
In!a!second,!later,!analysis!using!the!2010!service!values!matrix,!this!idea!was!
followed!up!by!a!new!consideration!of!the!network!makers!themselves,!the!
advanced!producer!service!firms!(Taylor!et!al!2014a).!TwentyWfive!such!firms!
with!sizeable!contributions!to!both!globalizations!were!identified!as!having!
interceding!strategic!office!networks.!A!new!measure!of!connectivity!was!
computed!using!just!the!strategic!firms!resulting!in!strategic!network!
connectivity!(SNC).!In!Table!7!SNC!is!listed!for!the!top!20!GNC!cities!as!‘absolute!
strategicWness’.!GNC!and!SNC!are!related;!the!higher!GNC,!the!more!likely!a!city!
will!include!the!selected!strategic!firms!in!its!service!mix.!But!the!relationship!is!
far!from!perfect!and!standardized!residuals!from!a!regression!between!the!two!
measures!are!used!to!compute!a!relative!strategicWness!(this!removes!the!GNC!
effect).!Cities!in!Table!7!are!ordered!by!relative!strategicWness!and!are!grouped!
into!five!groups.!!
!The$following$statements$can$be$derived$from$these$results$
The&fundamental&point&is&that&global&network&connectivity&does¬&
automatically&translate&into&the&strategic@ness&of&cities.&Dubai&and&
Frankfurt&illustrate&this&with&the&former&having&more&GNC&but&the&
latter&being&more&strategic&&
Strategic@ness&is&related&to&the&division&into&intensive&and&extensive&
globalizations&through&cities,&with&key&strategic&cities&combining&
strengths&in&both&globalizations&&
Although&London&and&New&York&are&usually&coupled&together&in&
world&city&network&analyses,&through&exploring&strategic@ness&they&
can&be&separated,&with&New&York&the&more&strategic&
In&another&reversal&compared&to&GNC&lists,&Shanghai&and&Beijing&
appear&to&be&more&strategic&than&Hong&Kong&(and&Singapore)&
US&cities&and&western&European&cities&(but¬&London)&are&the&five&
most&strategic&cities.&This&includes&Frankfurt&
At&the&other&end&of&the&new&rankings,&cities&with&low&strategic@ness&
tend&to&be&from&outside&the&main&globalization&arenas&of&USA,&
western&Europe&and&Pacific&Asia.&This&includes&Dubai&
!
Discussion!
There!is!a!range!of!results!differentiating!GNC!from!strategicWness!in!slightly!
different!ways!but!a!single!economic!process!can!be!discerned!behind!the!
changes.!This!is!most!clearly!seen!in!the!relationship!between!London!and!New!
York,!the!only!cityWdyad!that!actually!has!a!name:!NYLON!sometimes!seen!as!
being!a!single!transnational!city!(Smith!2012).!This!indicates!that!the!two!cities!
are!not!in!competition,!quite!the!opposite:!they!display!complementarities!based!
upon!their!dissimilarities!(Sassen!1999;!Wojcik!2011).!Basically!London!
provides!a!unique!transnational!platform!for!global!servicing!operations!while!
New!York!is!the!unrivalled!innovation!centre!for!global!service!products.!Both!
these!roles!are!most!acute!in!financial!services.!Although!both!roles!are!
necessary!for!the!functioning!of!economic!globalization!there!is!a!hierarchical!
element!in!their!relationship!in!the!sense!that!London!is!‘used’!by!New!York;!
firms!in!the!latter!city!use!the!former!city!to!market!their!new!work!globally.!
Thus!the!development!dynamism!resides!in!New!York,!the!more!strategic!city.!
!
This!distinction!between!production!of!new!work!and!its!wider!marketing!is!
broadly!found!in!other!comparisons.!In!China!the!mutualities!between!Hong!
Kong!and!Shanghai!are!functionally!similar!to!NYLON!structure.!Shanghai!is!the!
innovative!centre!developing!new!products!and!markets,!such!as!financial!
derivatives!and!futures!markets,!while!Hong!Kong!is!the!conduit!connecting!
global!capital!to!China!(Lai!2012).!In!this!way!dynamic!Shanghai!uses!Hong!Kong,!
and!is!thereby!more!strategic.!Parnreiter!(2010)!finds!a!similar!dependence!
